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Make Money by Trading Stocks
All too many individuals jump into trading stocks, lose money and decide that it really was impossible to make money by trading stocks. They blame the big trading houses, the Federal Reserve, Tea Party Republicans or President Obama. They forget or are unaware of the old saying that, we have met the enemy and he is us! But, considering how many folks lose their trading capital and just walk away, can you really make money by trading stocks? You can if you pay attention and have a solid plan. Successful stock traders base their trades on a combination of fundamental and technical analysis. Fundamental analysis tells us what the eventual price of a stock will be. Technical analysis tells us how that stock is going to perform along the way to its eventual price and is commonly the way to make money by trading stocks.
Anticipating the Future
You can make money by trading stocks if you can see the future. But how do you see the future? In trading stocks this is called technical analysis. The basis of technical analysis is that history tends to repeat itself. For example, during the height of Babe Ruth’s baseball career one could safely predict that the Great Bambino would hit thirty or more home runs in a season. During the height of the Cold War one could safely predict that there would be at least one confrontation between the USA and the USSR during any given year. Well, it turns out that you can make money by trading stocks using the same sort of logic but simply different data. Technical analysis is based on price patterns. The sum total of information and trading sentiment goes into driving prices up and down. There are a variety of distinctive price patterns that essentially predict the future. This was recognized both by rice traders in Japan and tulip bulb traders in Holland hundreds of years ago. The Japanese system was formalized and is used today. It is called Japanese Candlestick trading as it is a visual system of signals that are superimposed on a trading chart.
Make Money by Trading Stocks and Paying Attention
If all you do is analyze fundamentals you can buy a stock or sell short and simply wait for the market to come to you. However, as you can see from most stock charts that the price of the a stock moves up and down a lot before it finds its eventual price...